March 3, 2014
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ON THE WEB: Auto Loans Set Record
Outstanding automotive loan balances increased 11 percent from the fourth quarter of 2012, reaching $798.5 billion in the fourth quarter of 2013, the highest level since Experian Automotive starting publically reporting the data in 2007.
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Dealer Tries Again with Classic Cars
Franchise Dealer Ranks Shrink Slightly
According to Urban Science’s 2013 Automotive Franchise Activity Report, there were 17,838 dealerships (rooftops) as of Jan. 1, a 0.1 percent decrease from 17,851 as of Jan. 1, 2013. The report projects the network will remain stable for a fourth straight year.
Feds Require Special Labels for Recalls
The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced that starting Feb. 18, all manufacturers must use a distinctive label on required mailings that notify owners of recalled vehicles or equipment.
THE CHARM?: Bill Kay, left, and collector car expert Greg Cantu prepare to launch a new business focusing on classic Corvettes and other Chevrolet products, like this vintage Camaro. Kay has used the site of this new store for a Chrysler dealership and a Suzuki dealership. By Sheila McGrath
The economy dealt Bill Kay a one-two punch in recent years, but the suburban Chicago auto dealer is back with a new strategy – a store focusing on classic Corvettes. Kay oversees a family-run dealer group that has been
around since 1969. In 2009, a Chrysler dealership they owned in Downers Grove, Ill., was one of nearly 800 dealerships Chrysler closed as it underwent bankruptcy reorganization. After that business closed, Kay tried opening a Suzuki franchise at the site. But the
Suzuki business never got off the ground and closed in January 2012. Since then, Kay has been exploring a number of options for his 4.5acre site, which includes a 20,000-square-foot building. It’s located on Ogden Avenue – a “dealers row” with more than a dozen
used and new car stores. Ogden Avenue is an ideal location due to its exposure to both Interstate 88 and the Veterans Memorial Tollway, two major thoroughfares. “It has always been a destination for people that were out shopping for cars,” Kay said. Continued on page 12
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Slower Sales Spark Fears of Rising Incentives The threat of an incentive war heating up grows as new-car sales cool off from last year’s pace. New-vehicle sales peaked in the middle of last year, according to J.D. Power and LMC Automotive. They continued strong through the rest of 2013, but never matched the first half. Sales stumbled in January as extreme winter kept shoppers off dealers’ lots, but picked up in February. J.D. Power and LMC Automotive expected 972,400 retail new-vehicle sales for the month, up from 825,610 in January. That might prove too little, too late to stop an increase in
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incentives, however. ALG predicts a short-term spike in incentives. ALG’s mid- to long-term forecast (up to 36 months) still projects a 15 – 20 percent increase, but that might change. “Rising inventory levels combined with several more waves of bad weather will result in a short-term spike in incentives,” said Eric Lyman, vice president of editorial and consulting for ALG. “The danger is that this could be the beginning of an escalating arms race for market share.” Days to turn inventory in December (61 days) and January 2014 (59 days) reached the highest levels since August 2009 when the turn rate was 68 days.
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